Sordid past of bomb suspect revealed

Published: Monday, March 11, 2013 at 5:11 p.m.

Last Modified: Monday, March 11, 2013 at 5:11 p.m.

Months before pipe bombs were found in a New Hanover County storage unit, the man suspected of possessing them sent his bail officer a note saying he'd cut off his ankle monitor and stolen a car.

“I am sorry to send you this message but I have no option,” the Oct. 15 email from Istvan “Steve” A. Merchenthaler says. Merchenthaler was on pretrial release in Philadelphia awaiting trial in a multi-million-dollar Ponzi scheme that bilked some 200 investors over five years, according to a federal indictment.

“My attorney has failed me and refused to provide me with the files necessary to prepare for my hearing,” the email continues. “Therefore I must fend for myself and I am removing my monitoring device... I am also responsible for taking a vehicle from David Dodge.”

By Oct. 31, the Hungarian-born, Chapel Hill High School graduate, presumably operating under the name Charles Shreiner, was in Wilmington renting a $1,750-a-month furnished house on a quiet tree-lined Mainsail Lane in southern New Hanover County. By Jan. 30, the property manager had filed paperwork to evict him when he'd failed to pay the rent Dec. 1 and again on Jan. 1. On Jan. 31, a 2013 Dodge Charger disappeared from a Cary, N.C., car dealership, according to the Cary Police Department. On Feb. 15, Merchenthaler, 42, was arrested driving the stolen Charger in Harford, Md., according to the sheriff's department there. On Feb. 21, the Mainsail Lane home was raided by federal and state agents after a storage shed – purportedly rented to the same Charles Shreiner – was found to contain pipe bombs the day before.

Then on Thursday, more pipe bombs were found in a Pennsylvania storage unit.

The story has all the intrigue of a Hollywood thriller. The federal indictment, unsealed last week, offers a glimpse into what Merchenthaler was doing before law enforcement officials in Wilmington and Pennsylvania found pipe bombs in two storage units. But it remains unclear what Merchenthaler planned to do with the bombs or if the they were connected to the Ponzi scheme he is accused of running in the Philadelphia area.

“The FBI falls under the Department of Justice policy which very specifically states we do not release details of ongoing investigations to protect the integrity of the case and to protect the rights of those accused,” said FBI spokeswoman Shelley Lynch. “If information regarding an FBI case is a matter of public record, it will be available at the federal courthouse in the district where an investigation is occurring.”

The documents – search warrants for the Wilmington storage unit and the house – remained sealed Monday.

Sordid past

Merchenthaler was arrested in Brazil in April 2004 on drug-trafficking charges, but was never convicted. Two years later, he is accused of taking $2 million from 200 investors when he claimed to be the founder of PhoneCard USA, a “premier distribution source” for prepaid phone cards and cell phones. The indictment alleges he told investors PhoneCard USA had contracts with Walmart, 7-Eleven, and BJ's Wholesale Club, and that the company had $4.8 million in monthly revenues. In his marketing material, Merchenthaler falsely claimed he was friends with Walmart executives, according to the indictment. He allegedly said any investment would lead to “generous returns,” which he called “commissions,” starting six months after the original investment. He repaid some investors “to lull them into a false sense of security,” according to the indictment. When he couldn't pay the commissions, he told investors employees embezzled money.

During wire transactions with his investors, Merchenthaler allegedly used a variety of aliases, including Atilla Mergenthaler, Adien Adonis, Joey Gallow and C.S. The indictment states Merchenthaler used the investors' money for his salary, to pay his family and buy cars, jewelry and firearms. He also allegedly wired money to an undetermined location overseas.

In October 2008, he allegedly used $69,000 to buy a 2009 Mercedes Benz. In January 2009, he allegedly used $19,500 to buy a 2009 Nissan GT-R sports car. The indictment charges Merchenthaler also failed to file income tax returns in 2008 and 2009.

“This suspect was a skilled fighter, martial arts, high risk inmate,” Hopkins wrote in an email to The Sun explaining the situation. “The deputies cleared the CCTV room as he was a risk to anyone who was in there with him.”

The bombs

What exactly was found in the Monkey Junction storage unit on Feb. 20 is not immediately clear. The N.C. State Bureau of Investigation was asked that day to check out the unit by the FBI and the Maryland State Police, according to Noelle Talley, spokeswoman for the N.C. Department of Justice. The Maryland State Police is the agency prosecuting Merchenthaler on charges related to possessing the stolen Charger.

On Feb. 20, when the bomb squad found what looked like a pipe bomb inside the unit, they shot it with water and it exploded.

For the next 24 hours or more North State Storage at Carolina Beach and Sanders roads was teeming with law enforcement officers. At least one other bomb was detonated.

“The SBI assisted with searches at a storage facility and residence in Wilmington, and with safe disposal of explosives found at the storage facility site,” said Talley.

On Feb. 21, the bomb squad along with federal and local law enforcement officers converged on the empty Mainsail Lane home. Nothing of note was found there, said New Hanover County Sheriff's Office Sgt. Jerry Brewer.

And then, last week, the FBI, along with a Philadelphia bomb squad, found some 60 pipe bombs in a Malvern, Pa., storage unit. The bombs were detonated in a nearby park. A law enforcement official told The Mercury newspaper in Pottstown, Pa., that Merchenthaler was “connected to similar explosive investigations in other states.” The official said Merchenthaler is facing charges “in multiple jurisdictions throughout the East Coast.”

According to the Harford County, Md., Sheriff's Office, Merchenthaler was released to the U.S. Marshals Service and is in federal custody in Philadelphia.

If convicted of all charges, Merchenthaler faces a possible sentence of 102 years in prison – with a mandatory minimum of two years – and a $1.75 million fine, according to a U.S. Department of Justice news release.

<p>Months before pipe bombs were found in a New Hanover County storage unit, the man suspected of possessing them sent his bail officer a note saying he'd cut off his ankle monitor and stolen a car. </p><p>“I am sorry to send you this message but I have no option,” the Oct. 15 email from Istvan “Steve” A. Merchenthaler says. Merchenthaler was on pretrial release in Philadelphia awaiting trial in a multi-million-dollar Ponzi scheme that bilked some 200 investors over five years, according to a federal indictment. </p><p>“My attorney has failed me and refused to provide me with the files necessary to prepare for my hearing,” the email continues. “Therefore I must fend for myself and I am removing my monitoring device... I am also responsible for taking a vehicle from David Dodge.”</p><p>By Oct. 31, the Hungarian-born, Chapel Hill High School graduate, presumably operating under the name Charles Shreiner, was in Wilmington renting a $1,750-a-month furnished house on a quiet tree-lined Mainsail Lane in southern New Hanover County. By Jan. 30, the property manager had filed paperwork to evict him when he'd failed to pay the rent Dec. 1 and again on Jan. 1. On Jan. 31, a 2013 Dodge Charger disappeared from a Cary, N.C., car dealership, according to the Cary Police Department. On Feb. 15, Merchenthaler, 42, was arrested driving the stolen Charger in Harford, Md., according to the sheriff's department there. On Feb. 21, the Mainsail Lane home was raided by federal and state agents after a storage shed – purportedly rented to the same Charles Shreiner – was found to contain pipe bombs the day before.</p><p>Then on Thursday, more pipe bombs were found in a Pennsylvania storage unit. </p><p>The story has all the intrigue of a Hollywood thriller. The federal indictment, unsealed last week, offers a glimpse into what Merchenthaler was doing before law enforcement officials in Wilmington and Pennsylvania found pipe bombs in two storage units. But it remains unclear what Merchenthaler planned to do with the bombs or if the they were connected to the Ponzi scheme he is accused of running in the Philadelphia area.</p><p>“The FBI falls under the Department of Justice policy which very specifically states we do not release details of ongoing investigations to protect the integrity of the case and to protect the rights of those accused,” said FBI spokeswoman Shelley Lynch. “If information regarding an FBI case is a matter of public record, it will be available at the federal courthouse in the district where an investigation is occurring.”</p><p>The documents – search warrants for the Wilmington storage unit and the house – remained sealed Monday.</p><h3>Sordid past</h3>
<p>Merchenthaler was arrested in Brazil in April 2004 on drug-trafficking charges, but was never convicted. Two years later, he is accused of taking $2 million from 200 investors when he claimed to be the founder of PhoneCard USA, a “premier distribution source” for prepaid phone cards and cell phones. The indictment alleges he told investors PhoneCard USA had contracts with Walmart, 7-Eleven, and BJ's Wholesale Club, and that the company had $4.8 million in monthly revenues. In his marketing material, Merchenthaler falsely claimed he was friends with Walmart executives, according to the indictment. He allegedly said any investment would lead to “generous returns,” which he called “commissions,” starting six months after the original investment. He repaid some investors “to lull them into a false sense of security,” according to the indictment. When he couldn't pay the commissions, he told investors employees embezzled money.</p><p>During wire transactions with his investors, Merchenthaler allegedly used a variety of aliases, including Atilla Mergenthaler, Adien Adonis, Joey Gallow and C.S. The indictment states Merchenthaler used the investors' money for his salary, to pay his family and buy cars, jewelry and firearms. He also allegedly wired money to an undetermined location overseas.</p><p>In October 2008, he allegedly used $69,000 to buy a 2009 Mercedes Benz. In January 2009, he allegedly used $19,500 to buy a 2009 Nissan GT-R sports car. The indictment charges Merchenthaler also failed to file income tax returns in 2008 and 2009.</p><p>During a bail review hearing Feb. 19 on the stolen vehicle charge in Bel Aire, Md., jail guards “cleared the room” because, sheriff's office spokesman Eddie Hopkins told the Baltimore Sun, Merchenthaler was considered a security risk.</p><p>“This suspect was a skilled fighter, martial arts, high risk inmate,” Hopkins wrote in an email to The Sun explaining the situation. “The deputies cleared the CCTV room as he was a risk to anyone who was in there with him.”</p><h3>The bombs</h3>
<p>What exactly was found in the Monkey Junction storage unit on Feb. 20 is not immediately clear. The N.C. State Bureau of Investigation was asked that day to check out the unit by the FBI and the Maryland State Police, according to Noelle Talley, spokeswoman for the N.C. Department of Justice. The Maryland State Police is the agency prosecuting Merchenthaler on charges related to possessing the stolen Charger. </p><p>On Feb. 20, when the bomb squad found what looked like a pipe bomb inside the unit, they shot it with water and it exploded. </p><p>For the next 24 hours or more North State Storage at Carolina Beach and Sanders roads was teeming with law enforcement officers. At least one other bomb was detonated. </p><p>“The SBI assisted with searches at a storage facility and residence in Wilmington, and with safe disposal of explosives found at the storage facility site,” said Talley. </p><p>On Feb. 21, the bomb squad along with federal and local law enforcement officers converged on the empty Mainsail Lane home. Nothing of note was found there, said <a href="http://www.starnewsonline.com/section/topic9932"><b>New Hanover County Sheriff</b></a>'s Office Sgt. Jerry Brewer. </p><p>And then, last week, the FBI, along with a Philadelphia bomb squad, found some 60 pipe bombs in a Malvern, Pa., storage unit. The bombs were detonated in a nearby park. A law enforcement official told The Mercury newspaper in Pottstown, Pa., that Merchenthaler was “connected to similar explosive investigations in other states.” The official said Merchenthaler is facing charges “in multiple jurisdictions throughout the East Coast.”</p><p>According to the Harford County, Md., Sheriff's Office, Merchenthaler was released to the U.S. Marshals Service and is in federal custody in Philadelphia.</p><p>If convicted of all charges, Merchenthaler faces a possible sentence of 102 years in prison – with a mandatory minimum of two years – and a $1.75 million fine, according to a U.S. Department of Justice news release.</p><p>Kevin Maurer: 343-2339</p><p>On <a href="http://www.starnewsonline.com/section/news41"><b>Twitter</b></a>: @FTNorton</p>